An industry that nurtures active debate over its important issues must surely be a healthy one. Consumer Duty is certainly attempting to encourage that same kind of culture within Financial Services and the topic is especially relevant as we all look towards embedding those processes and procedures that will deliver against the spirit of the new Duty in the months and years ahead.
One of the more hotly debated areas that we see firms revisiting as a result, is that of Training and Competence (T&C), the importance of nurturing a competent workforce in the context of the Cross Cutting Rules and indeed, its role in developing professional standards within the financial services sector and how those standards directly affect customer journeys and customer outcomes.
At its core, the FCA’s requirements for T&C expects firms to demonstrate that relevant staff have the right qualities and competencies to carry out their responsibilities appropriately. For many firms, that term ‘relevant staff’ restricts scope of T&C schemes to those professionals requiring qualifications for role. And further to that, for some in our industry, training and competence has simply been another regulatory burden regarded purely as just adding to the costs of running a business and reducing the amount of time available for more profitable activities.
At the other end of the spectrum, however, are those who either have already, or are now planning to, invest the time and money to make training and competence an integral and added-value part of their business. The Duty is demanding a refocus on outcomes, culture and conduct, so it’s not surprising that we’re seeing an increasing appreciation from all camps that a well-designed and targeted T&C regime can offer value, opportunity and purpose when managing skill, capability and competence across the entire workforce.
What’s the difference between Training and Competence?
Training, in its true form, is an environment in which people are not only presented with knowledge but are provided opportunity to practice techniques to acquire skills, too. A class in which the participants do nothing except listen to an instructor or teacher may be educational, but it is not training. There must be the acquisition of skill, not simply knowledge. It’s important to remember though that a trained person is not necessarily a competent person.
Competence is the ability to demonstrate use of education, skills and behaviours to achieve the results required for a job. A person may have learned the necessary skill under classroom conditions, but in practice where the ability to apply that skill in real life scenarios is required, the individual might find themselves not having the necessary capabilities, or breadth of competence, to do the job in an efficient and capable manner.
Competence can be effectively summarised as the combination of training, skills, experience and knowledge that a person has and their ability to apply those attributes to perform a task effectively.
To put that into context, consider whether a trained person that knows how to execute the requirements of a job can automatically be judged as being competent? I would suggest not the transition from trained to competent is an ongoing evolution in which acquired skills and knowledge are transformed into capability. Competence is concerned with outcomes rather than attributed abilities.
What’s the difference between skill and competence?
If we think of knowledge as an understanding of what needs to be done, then skills are how to do it. Some skills come naturally; others must be learnt. Even skills that we already possess can be improved, sharpened and enhanced.
One of the key advantages of a T&C scheme is the opportunity it affords to provide individuals with feedback through observation and supervision. It also provides opportunity for objective feedback too— particularly about how trainees are applying their knowledge in practice, during the sales process, or whilst fielding a complaint, for example.
Coaches and supervisors need to be competent and capable too, of course. With skilful assessment, and targeted coaching interventions and/or training within a Continuous Professional Development (CPD) framework, individuals can benefit from an invaluable and irreplaceable way of ensuring skills are kept sharp and all the knowledge acquired is deployed to optimum effect.
The supervisor/employee relationship is key to the success of any T&C scheme or competence management programme. It not only benefits the individual, but it can also be the means by which best practice is disseminated throughout the firm, widening and strengthening the skills base as a result.
T&C Culture
Why should we pursue and encourage a proactive approach to managing competence as best practice then? Why should we bother investing the time, the money and the effort?
A justifiable opposing argument might be to suggest that if culture, conduct, and customer outcomes are being judged as running at appropriately high levels, then there’s no need for T&C anyway. It is at least true that over my 25-year career in this industry, I have encountered a whole range of organisations spanning all sectors of financial services—some of which have consciously opted for a ‘minimalist approach’, with the sole goal of ticking the regulatory box.
I’ve seen many an organisation too, who have made no conscious decision beyond the appointment of a T&C officer or manager, who then find themselves battling with the rest of the business to make anything like a meaningful impact. Either of these scenarios could be seen as a good indication that the culture of said firm is not necessarily focused on reputation, outcomes and genuine professional development.
It’s also true that, on an individual level, an employee may well have an abundance of knowledge but no motivation or incentive to improve and develop their skills and capabilities in an ongoing way. Conversely, someone else may have a variety of skills, but rigidly resist acquiring the knowledge which would allow them to make the most of those skills. In either case, what is missing is an attitude that accepts that, ultimately, responsibility for professional development lies as much with the individual as with the firm that employs them.
Many of the organisations I have worked with directly have leveraged the insight, knowledge, solutions and capabilities Worksmart offers, to help develop an approach that makes T&C work hard for their benefit and earn its keep. Recognising that effective management of competence, capability and conduct at an individual level is a crucial component for maximising the benefit and ongoing business advantages that a capably skilled workforce enables. We don’t see Team GB’s Olympic squad, or any other highly competitive organisation for that matter, resting on its laurels.
T&C in a modern financial services company
The regulatory landscape has never been so complex, and the pressure on staff to learn and retain what is trained – and to individually translate this into in-role competence – currently seems limitless and somewhat daunting.
At very least, that ‘minimalist approach’ to managing competence I referred to earlier needs updating. This can be done through modernising the systems and controls that enable a more transparent, inclusive, and authentic approach to T&C; one that ensures employees genuinely understand their obligations and accountabilities and enables the ability to manage competence and capability in line with those demands. Solutions that provide supervisors and coaches with the most appropriate data, management information (MI), insight and information to help drive specifically targeted actions and interventions and evidence compliance simply by managing the capability of your workforce in a smart way.
Learn more about the Worksmart product suite – If you would like to discuss with Worksmart how your firm can leverage technology to drive, monitor and evidence compliance with Consumer Duty, you can also contact me directly via email.
Subscribe to our leadership base – subscribe to access a range of papers, podcasts and webinars on topical regulatory matters.
Access the EDGE – increase your effectiveness as a conduct and culture leader.